Unsustainable debt and the political economy of lending: constraining the IMF’s role in sovereign debt crises

The timely resolution of severe debt crises has long been one of the most difficult challenges for global financial cooperation. Focusing on the case of Greece, the paper to be presented at this event examines how the euro crisis precipitated large International Monetary Fund (IMF) loans that violated the framework developed on the basis of the preceding decade to prevent a costly delay in restructuring.

The paper reveals that safeguards meant to prevent the IMF from providing support for crisis countries without a reasonably clear path to debt sustainability failed. In fact, changes made in the context of the euro crisis to the IMF’s framework for lending in severe sovereign debt crises will weaken the IMF’s effectiveness in future crises. The paper concludes with four suggestions for how to re-establish an adequate framework for IMF intervention in severe debt crises in the future

Event Speakers

Susan Schadler is a CIGI Senior Fellow. She is a former deputy director of the International Monetary Fund’s European Department, where she led surveillance and lending operations to several countries and managed a number of research teams working on European issues. Her current research interests include the sovereign debt crisis, global capital flows, global financial institutions and growth models for emerging market economies.

Events Contact

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